Is GoPro on the Path to Recovery?

Is GoPro on the Path to Recovery?

Is GoPro on the Path to Recovery?

On 3rd August 2017, GoPro reported a significantly better-than-expected post-earnings performance with stocks experiencing a 19% gain. Revenues reached $296.5m, around 10% higher than analyst predictions and representing a 34.3% year-over-year growth. Losses were cut to approximately $30m, down from $90m in Q2 2016.

(GoPro’s stock price over the past three months. Source: marketwatch.com)

Driven by both strengthening demand and cost-saving measures, the accompanying surge in stock price marks a welcome break from GoPro’s sustained decline over recent years. By January 2015, stock prices were already in the midst of a long-term decrease, having dropped to around $65 from a peak of $85. By January 2017, however, they had continued to drop to just $8. They have stayed at this level since.

Such a fall was driven largely by competition from rapidly improving smartphones and production issues with its Hero5 camera. In premarket trading on August 4th, 2017, the stock soared 17%, having previously fallen more than 4% so far this year. So do these stats reflect the start of a new, more successful period for GoPro? Or are they nothing more than a random fluctuation with little substantial meaning?

A New Start?

To begin with, it should be noted that GoPro is releasing a number of new products soon. Its two new products, Hero6 and Fusion (GoPro’s 5.2k spherical camera), are on track to be launched later this year. The launch of these products is predicted by some to help sustain the upward momentum GoPro has enjoyed across 2016 and 2017.

The company is also aiming to focus more on its international market. Both the user interface and voice control are now available in ten different languages. Sales are up 200% in Japan for this very reason. Furthermore, the invention of QuikStories – a new feature that lets users create movies automatically from clips, with immediate upload facility to Instagram and Twitter – represents a huge leap for GoPro.

“GoPro is building momentum. [Our Hero6 and Fusion cameras] are on course to launch later this year and we continue to track toward our goal of full-year, non-GAAP profitability in 2017.”

Nicholas Woodman, GoPro CEO

However, why did demand fall in the first place, and what will stop this happening again? GoPro’s initial camera seemed like a revolutionary product when it was first launched. What gives these new products, strategies and features a better chance to succeed?

Cameras vs. Smartphones

As mentioned above, GoPro was losing out to smartphone competition and dealing with various production problems. In response to this, CEO Nicholas Woodman aims to market the new cameras as complementary to smartphones. By emphasising perhaps the durability and video quality of the Hero6, for example, GoPro could become something distinct and therefore necessary for any amateur movie maker.

However, this task of making GoPro’s video capability seem distinct yet necessary – additional to familiar smartphone video capabilities – will be an uphill struggle. New smartphones – such as the new waterproof iPhone 7 – will continue to generate widespread views that GoPro products are an unnecessary luxury, reserved for only the most avid extreme sport fans and video-editing enthusiasts.

Conclusion

Should Woodman succeed in overcoming this problem – and learn from past errors regarding production – one could soon be seeing GoPro on a path to new successes in the near future.

Failing to do so, however, could spell the end for the company as smartphones continue to dominate and the need for GoPro products become increasingly unpopular.

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